Non Sequiturs are poor policy, and even worse credit references

By Ben D. Kritz

If there is one thing that has been thoroughly regrettable about the apparent economic progress of the Philippines in the Aquino 2.0 era, it is that it has led the administration to believe that what it is doing is actually working.

Perhaps we should not judge them too harshly for that—after all, far sharper minds than those currently wandering the halls of government also occasionally confuse correlation for cause—because for the most part, the country has found ways to progress economically in spite of the government.

The frustration for the rest of us, of course, is that we must sit by and watch enormous opportunities slip through our grasp, as the Aquino administration receives ill-advised affirmation for pursuing an economic strategy entirely based on non sequiturs. To be fair, the mission statement has been refined somewhat in the past three years: What started out as “when there is no corruption, there will be no poverty” during the 2010 campaign has been upgraded to the smarter-sounding “good governance and a level playing field will lead to inclusive growth.” 

Clearly, the Aquino administration has no idea what any of those three key ideas: good governance; the “level playing field”; and inclusive growth actually mean, and apparently, neither does the Board of Directors of the World Bank, who last week approved a $300-million (P12.26 billion) Development Policy Loan (DPL) to the government “to support the Philippines’ critical reforms for accelerating inclusive growth,” according to the World Bank’s press release. Justifying the approval of the loan, World Bank Country Director Motoo Konishi explained, “The Philippines is vigorously implementing a comprehensive reform agenda centered on restoring people’s trust in government through improved governance and empowering them to rise above poverty. We are pleased to support the program through the DPL as well as through our broader engagement under the Bank’s country assistance strategy.”

With all due respect to Konishi, that is a statement that gives one the impression his office is located under a rock somewhere, or in some dimension of opposites where, for instance, serious questions of the technical and data-security reliability of the system to be used in the upcoming elections (a system that is technically operating on unlicensed software, and is apparently so poorly-guarded that three voting machines were recently discovered in a motel room) somehow constitute improved governance, and improving trust in government. Or that those are encouraged by unilaterally surrendering a long-standing, albeit dormant national claim to Sabah. Or by the President’s declaring that one of the very few definable campaign promises he made—the Freedom of Information bill—is no longer important. “Empowering people to rise above poverty,” in the World Bank’s alternate universe, is apparently evidenced by a combined unemployment/underemployment rate that has climbed from the 24.9 percent President Benigno Aquino 3rd inherited in July 2010 to 28 percent in January 2013.

Part of the explanation from the World Bank about the intended uses for the DPL specifies that the loan will be used to supplement the government’s budget for improving the government’s investment climate. Yet at just about the same time the approval of the DPL was being announced, Malacañang Secretary-for-Something-or-Other Ricky Carandang was rejecting, for the nth time, a pointed suggestion being made for the nth time by the Makati Business Club (folks who do know a thing or two about the investment climate) that Constitutional restrictions on foreign investment be lifted to make the country more attractive to investors, with his colleague Malacañang Talking Person Ed Lacierda adding, “the President believes the Philippines can also attract more foreign investors by ‘keeping a level playing field.’” 

Three projects of the virtually aborted public-private partnership scheme have recently had their bidding processes delayed, again. The bidding process for a critically-needed system overhaul at the dysfunctional almost to the point of uselessness Land Transportation Office has erupted into controversy, one that involves yet another highly-qualified and respected foreign firm, a class of enterprises with which the Aquino administration has a thoroughly wretched track record. The long-overdue lifting of a moratorium on mining applications has failed to produce the investment bonanza it should, because a key administration ally in the person of Sen. Serge Osmeña persists in holding hearings over the tailings spill at Philex Mining Corp.’s Padcal site in Benguet last August, long after the company amicably paid in full the P1.034-billion fine for the accident (which caused no casualties or toxic release, so far as is known), and committed P4 billion without waiting for government directions to do so to remediation and safety upgrades. 

None of that constitutes “a level playing field” in even the most imaginative sense, and come 2015, when the Asean (Association of Southeast Asian Nations) Free Trade Agreement will be fully implemented, the playing field is going to get a whole lot bigger. 

Good governance is not happening when every function of managing the country—from foreign affairs down to the relatively straightforward task of providing food aid for victims of typhoon that happened four months ago—is riddled with indecision, errors and ulterior motives. A level playing field is not being created by keeping doors closed to investments that the Philippines’ aggressive neighbors do not and by sending nothing but discouraging signals about the few opportunities the government does allow. Inclusive growth is not happening when the growth in the number of people who cannot find adequate work or any work at all is accelerating. 

Until now, the big economic picture has shown us none of that has mattered as much as the socially-conscious among us think it probably should. But now the Philippines is on the hook for a big loan that it doesn’t actually need, given for reasons that could at best be considered as gross misconceptions on the part of the lender and possibly fraudulent on the part of the borrower. Now, the government’s economic policy based on uttering unrelated catchphrases may have real consequences, because they come with a price tag. It is more than past time for this country to start measuring results against the rhetoric and holding the government to account for the differences; $300 million, after all, is too much to spend for ill-defined aspirations.